Chinese policymakers have responded to the crisis with a suite of short-term measures but are yet to launch a large-scale response.
ANZ Research expects a grand plan presented by the time China holds its National People's Congress, currently expected toward the end of April or early May.
There has been discussion around a ‘New Infrastructure Investment Plan’ but a repeat of the scenario seen during the response to the global financial crisis (massive hard infrastructure investment) is unlikely.
ANZ Research is reluctant to describe any ultimate move as a ‘stimulus plan’ because it is unlikely China will use traditional measures of monetary policy easing.
Unlike the US Federal Reserve and the central banks from other G7 nations, China’s central bank is very measured in its approach. In many ways the bank has learned not to fill up its debt levels and will be particularly targeted in terms of policy approach.
ANZ Research expects countercyclical measures to be delivered primarily through fiscal policy (including tax cuts, consumption support and SME support) and encouraging the state-owned enterprise investment pipeline. China’s government will still be mindful of debt growth and increasing macroeconomic leverage.
The government will be determined to achieve the first centennial goal which requires a real gross-domestic growth of 5.6 per cent in 2020, although it seems to be unrealistic given the economic outlook in 2020.
Raymond Yeung is Chief Economist, Greater China at ANZ
This story is based on a presentation given by Yeung on an AustCham Hong Kong webinar on March 25 2020.